Opening Remarks by the Deputy Managing Director Antoinette M. Sayeh at the Launch of IMF Book on India’s Financial System


Opening Remarks by the Deputy Managing Director Antoinette M. Sayeh at the Launch of IMF Book on India’s Financial System

April 25, 2023

As Prepared for Delivery

Good morning to everyone, and thank you very much, Dr. Wood for the introduction. Let me begin by thanking the Wilson Center for kindly hosting us today and helping us launch this new book on India’s financial sector.

It is indeed an important book, on a sector that is critical to India’s growth and development. The book provides, as one would expect, a comprehensive view of the sector. But it also offers an analysis of specific financial sector policies that can better support India’s growth potential.

As backdrop to the book, I will first comment briefly on India’s remarkable economic and financial journey.

In 1991, when India embarked on its economic liberalization, its real per-capita income was just shy of $600. Today, that has more than tripled.  An estimated 400 million people in India have been lifted out of poverty just in the last 15 years. And this is one of the fastest poverty reduction rates in the world.

India’s role on the global stage has also shifted dramatically. In 1991, the country was one of the world’s largest aid recipients. Today, India is a net donor. In purchasing power parity terms, it is also the third largest economy in the world, expected to contribute about 15 percent to global growth this year. And also this year, India is taking a lead role on the global stage with its G20 Presidency. In that role, its agenda focuses on global public goods and strengthening international coordination around debt, crypto assets, climate and digitalization.

India’s economic progress over the past decades has been underpinned by a transformation in its financial sector.

The 1990s saw an increasing role of private sector banks, the introduction of universal banking, adoption of international best practices in regulation and supervision, and the creation of the National Stock Exchange as well as electronic trading. Thanks to these developments, larger firms were able to increase their access to market-based funding, using both bond and equity markets. For their part, households and SMEs could rely on banks and nonbank financial companies.

But India’s achievements in the financial sector clearly go beyond numbers of banks or market capitalization. The country has impressed the world in fostering financial inclusion through its public digital infrastructure. Just a decade ago, local shops were filled with people buying and selling goods with cash. Today, financial transactions are mostly executed with smartphones.

The public digital infrastructure is also helping to improve the efficiency of public finance management. On the one hand, the unique identifier based on biometric measurements—which underpins the digital payment architecture—allowed the government to save money by eliminating ghost employees from its payroll. On the other hand, the digital payment system boosted revenue collection from the general sales tax, while reducing tax compliance costs for businesses. It has also helped ramp-up the distribution of social benefits to millions who were previously unreachable.

And this proved particularly instrumental during the pandemic: The Indian authorities were able to transfer 37 billion dollars in social benefits to people’s bank accounts in 2020–2021, avoiding costly intermediaries and reducing leakages.

Of course, India’s financial development journey has not always been smooth. It has faced external turbulences—such as the Asian financial crisis, the global financial crisis, and more recently, the devastating impact of the pandemic and the war in Ukraine. But the authorities have drawn lessons from these shocks and applied themselves to identifying and implementing policies to increase financial sector resilience.

India has also confronted homegrown challenges. One notable example was the default of systemically important nonbank financial companies in 2018. Since that crisis, the Indian authorities have upgraded their regulation and supervision, and introduced a regulatory framework for nonbank financial companies. Important progress has also been made in bank recapitalization, corporate debt restructuring and oversight of financial market institutions, as well as in crisis management.

But more work lies ahead for India.  This includes continued efforts to strengthen regulations for non-bank financial corporations, promote improved governance, and reduce the public footprint in the banking sector. India’s financial sector is also confronting challenges facing all countries, such as the spillovers from the tightening of global financial conditions, the need to adapt to technological change, or the impact of climate change.

I should also make two points on climate change and financial innovation.

  • The first is that India is highly vulnerable to the effects of climate change. It would benefit from broadening and deepening its sustainable finance market to support its climate mitigation efforts.
  • The second point is that financial innovations and rapid financial sector development bring many opportunities such as improved access to financial services by vulnerable populations. But we know that they also present challenges for regulation and supervision, which constantly need to be upgraded to support healthy development of the financial sector while avoiding the buildup of risks.

These are issues the Fund discusses with the Indian authorities, through our annual Article IV consultation and through regular Financial Stability Assessment exercises. But as you will discuss today, thematic analytical work such as the book we are launching here also play a role.

We hope that the findings of the book can contribute to policymakers’ reflections as they move forward. And we hope that they will also be useful in the public debate as India charts its way to what we hope will be an even brighter future in the years ahead.

Thank you very much.

IMF Communications Department


Phone: +1 202 623-7100Email:


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